It all depends on where you are in life. I think most people here are still in accumulation phase. We want leverage and more growth. I think most people plan to be debt free or have very little debt at some point.
Have you done numbers when it comes to pay more every month via 15 years vs 30 years? I know it sounds weird, but that extra amount every month will impede you from using that money to invest it on another home, right?
Will your mind change if the tax reform affects you?
For 15 years, if we pay $X as interest, we pay $3X for 30 years. On any case, when we see interest side, we may stand to gain 2X by changing to 15 years, but when we account ROI on investment keeping 30 years, we gain a lot when ROI exceeds 10%
I was having first 30 years, refinanced to 15 years, then returned back to 30 years fixed.
When you retire, one of the old time concerns was that you wouldn’t have any deductions, thus having a mortgage was a bless or a disgrace if you didn’t have any savings. Your SS then would be taxed to the max because your rentals and whatnot income would trigger the IRS to tax you on a tax bracket you, by not understanding the fundamentals of double taxation, fell in by not having any deductions.
I don’t know if the future tax reform will change that.
As long as I am working, like most earners, I will be paying mortgage. The moment I turn to retirement, all mortgages will be paid no matter how much interest rate is. At that time, I look at mortgage as risk than investment/ROI.
A lot of people have 200k pension after retirement. I think they only need to buy a life insurance policy and no need to pay off mortgage. Their life is more valuable financially than a no-income retiree
Most of people we interview during our retirement plans never knew that, first, they had to pay taxes to cash out their 401Ks, IRAs, etc. They didn’t know that when they retired their income from rentals and whatnot would make them qualify to sometimes a higher tax bracket than 0, which is the aim of many retirees. That will result in their SS income being taxed up to 85%. So, with no deductions, they will pay straight to uncle Sam money that they could have easily be saving if they planned with anticipation. It is like any business that has only income but barely any expenses to deduct. Cha-chin!
They also, lack of any life insurance because at the time they were in the age of thinking, the usual insurance being promoted was term, whole life or regular life insurance, very expensive, so they didn’t believe in anything. So, if they get into a very grave situation, they have to spend down all what they saved down to certain amount, so they can qualify for any government assistance. By the way, there’s no long term care paid for by the government. As I said, once you spend down to the legal limits, from there you will live with a house and a car and some money in the bank. If you had plenty, most will have to be spent down to pay for long term care. Google it.
Next week, at our office’s meeting, we’ll have a meeting/class where a CPA will teach us how to put grandma/pa into a retirement home as a higher income person paying $7K+ a month, then, do a legal trick, and leave her there paying $700 a month, even though the have plenty of $ to pay for her care. All legal, playing by the rules.